- Mark
Thursday, July 25, 2013
WHY JESUS ONLY FORGIVES REPUBLICANS
This Bill Maher clip is too funny. Fair Warning: Don't watch this if you find off-color language offensive (it is Bill Maher) ...
- Mark
- Mark
WHY WALL STREET'S "LEMON LAW" (SEC CODE 10b-5) MEANS LITTLE TODAY
Code 10b-5 of the Securities and Exchange Commission (SEC) is pretty clear. You can not lie or omit information about the investment (security) products you are trying to sell. Pretty simple.
For example, you can't create a fancy investment product that you know is crap and then dump it on clients - like pension plans or the U.S. government - without telling them about the downside. The warning "buyer beware" is not good enough when you know you're peddling crap.
As is the case with any car salesmen, you can't lie or omit information when you know about potential product defects and hazards. Call SEC 10b-5 the lemon law for Wall Street. Still, with all the market smoke & mirrors that we see on Wall Street, deception happens all the time.
This explains why so many financial institutions have settled cases for billions of dollars rather than try to defend themselves in court. They know how they have defrauded customers, and also know that it's cheaper to settle than to go to court. Barry Ritholtz, CEO of Fusion IQ (and author of "Bailout Nation"), does a pretty good job of explaining the issue here.
So there is no doubt, this is what SEC 10b-5 says:
This all looks good except for one thing. All the exemptions and loopholes the U.S. Congress has granted Wall Street.
I especially like the exemption for SIPA, which might as well be called "let Wall Street do what they want as long as the fine print is good" law. In the FYI category SIPA was designed to protect customers from Wall Street firms who like to dip into customer accounts without their knowledge (which you can read about here). The SIPA exemption combined with this exemption for broker-dealers - and the fact that Glass-Steagall was effectively repealed in 1999 - essentially allows broker-dealers and Wall Street's biggest players to do what want (as long as the fine print is worked out).
Long story short? Favorable legislation and deregulation is undermining both the spirit and integrity of the SEC's Lemon Law, and nobody seems to care.
- Mark
UPDATE: Here's a list of JP Morgan's most recent fines, which add up to more than $7 billion. http://www.zerohedge.com/news/2013-07-30/jpmorgan-7-billion-fines-just-past-two-years
For example, you can't create a fancy investment product that you know is crap and then dump it on clients - like pension plans or the U.S. government - without telling them about the downside. The warning "buyer beware" is not good enough when you know you're peddling crap.
As is the case with any car salesmen, you can't lie or omit information when you know about potential product defects and hazards. Call SEC 10b-5 the lemon law for Wall Street. Still, with all the market smoke & mirrors that we see on Wall Street, deception happens all the time.
This explains why so many financial institutions have settled cases for billions of dollars rather than try to defend themselves in court. They know how they have defrauded customers, and also know that it's cheaper to settle than to go to court. Barry Ritholtz, CEO of Fusion IQ (and author of "Bailout Nation"), does a pretty good job of explaining the issue here.
So there is no doubt, this is what SEC 10b-5 says:
§ 240.10b-5 Employment of manipulative and deceptive devices.It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security.
(Sec. 10; 48 Stat. 891; 15 U.S.C. 78j)
[13 FR 8183, Dec. 22, 1948, as amended at 16 FR 7928, Aug. 11, 1951]
This all looks good except for one thing. All the exemptions and loopholes the U.S. Congress has granted Wall Street.
I especially like the exemption for SIPA, which might as well be called "let Wall Street do what they want as long as the fine print is good" law. In the FYI category SIPA was designed to protect customers from Wall Street firms who like to dip into customer accounts without their knowledge (which you can read about here). The SIPA exemption combined with this exemption for broker-dealers - and the fact that Glass-Steagall was effectively repealed in 1999 - essentially allows broker-dealers and Wall Street's biggest players to do what want (as long as the fine print is worked out).
Long story short? Favorable legislation and deregulation is undermining both the spirit and integrity of the SEC's Lemon Law, and nobody seems to care.
- Mark
UPDATE: Here's a list of JP Morgan's most recent fines, which add up to more than $7 billion. http://www.zerohedge.com/news/2013-07-30/jpmorgan-7-billion-fines-just-past-two-years
Wednesday, July 24, 2013
Tuesday, July 23, 2013
DECIPHERING GOLDMAN SACHS' ALUMINUM MANIPULATION "FACT SHEET"
Goldman Sachs is being accused of market manipulation (again). Specifically, the New York Times is alleging in "A Shuffle of Aluminum, but to Banks, Pure Gold" that Goldman Sachs is using its warehouses to keep aluminum from reaching the market, which alters the price of aluminum to their benefit.
Goldman Sachs issued a fact sheet in response. Two things stick out.
First, it's really convoluted. This, no doubt, is deliberate.
Second, Goldman Sachs doesn't refute the article's larger claim about tying up aluminum supplies for longer and longer periods to jack up the price. Here's what the NY Times' article claims:
Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than 20-fold — to more than 16 months, according to industry records.
At the end of the day, if the Goldman Sachs fact sheet was designed to refute the claim that Goldman Sachs is manipulating the aluminum markets, it was a big fail. Specifically, Goldman agrees that they physically hold large amounts of aluminum ("We hold an inventory position ..."). They also make it clear that they own the warehouses where aluminum is moving in and out of, as claimed in the article ("We also hold other physical commodity operations as investments ...").
Then it gets fun.
Goldman Sachs refutes the claim that the people at the warehouse mentioned (Metro) are manipulating shipments. But they also make it clear that "it's the owner of the metal" who makes the decision to move aluminum out of one warehouse "to meet their own needs or objectives."
Again, Goldman doesn't really argue with the market manipulation claim, other than to say that the warehouse company (Metro) is not doing it to extract more more money (higher rents). But they're not disputing the claim that they've had a hand in the market manipulation.
But don't trust me on this. Read the article and Goldman's response for yourself. This article from the Washington Post also sheds light on the manipulation.
- Mark
UPDATE (8-04-13): In the About Time category ... Goldman Sachs is going to get sued (Zero Hedge).
UPDATE (8-01-13): John Oliver offers his opinion on Goldman Sachs' aluminum price manipulation here ...
A GLOBAL FINANCIAL OLIGARCHY? YOU DECIDE ...
Does a global financial oligarchy exist? Do a handful of people run our global economy? Read the Global Power Project's on-going series on global wealth and power and decide for yourself. The articles should keep you busy for a while ...
Part I: Exposing the Transnational Capitalist Class.
Part II: Identifying the Institutions of Control.
Part III: The Influence of Individual and Family Dynasties.
Part IV: Banking on Influence With JP MorganChase.
Part V: Banking on Influence With Goldman Sachs.
Part VI: Banking on Influence With Bank of America.
- Mark
LEWIS BLACK MESSES WITH TEXAS ... IN A BIG WAY ;-)
Texas Governor Rick Perry is running around the country trying to drum up business for his state. Here's what Lewis Black had to say about Gov. Perry's trip to New York. Too funny ...
- Mark
Monday, July 22, 2013
READING FOR THE WEEK (July 22, 2013)
Here's what Manhattan would look like inside the Grand Canyon (New York Magazine).
World's scariest bridges (Travel + Leisure).
THROW A TENT OVER THIS CLOWN SHOW
Darrell Issa ... wannabe, fool, and all around clown (NY Times).
The Return of Lawrence Summers, Mr. Spectacular Failure (Creators).
So Dick Cheney's daughter, Liz Cheney, is running for U.S. Senate in Wyoming. Here's 10 fun facts about the person who makes nepotism look worse than it already is (Mother Jones).
The 10 mind numbingly dumbest things ever said about abortion and women's rights (Rolling Stone).
Charles Koch Foundation: If you earn $34,000 per year you're in the top 1%. What they ignore is that if you work full-time in a minimum wage job in America you won't earn more than $16,000 per year, and that you need to live in a place like Bangladesh to enjoy the benefits of being in the top 1% (Huffingpost).
MORE REASONS TO DITCH BANKS AND GO WITH CREDIT UNIONS
Is your money safe in an insured bank account? With the new reality of banks shifting bank losses on to depositors means you should think again (Truthout).
Another reason to ditch the banks and bank with credit unions ... If you put $250 in a Chase bank account and get 12.5 cents a year (at 0.05% APR) you will likely be charged a $4.00 per month fee if there is no activity in your account (Buzzflash/Truthout).
Too Big To Fail banks pushing to crush credit unions - and remove the competition - by going after credit union tax exemption (LA Times).
MORE MARKET STUFF (you should know about)
Monsanto's patent appeal rejected by the Indian government, saving farmers, food, and lives (Nation of Change).Another reason to ditch the banks and bank with credit unions ... If you put $250 in a Chase bank account and get 12.5 cents a year (at 0.05% APR) you will likely be charged a $4.00 per month fee if there is no activity in your account (Buzzflash/Truthout).
Too Big To Fail banks pushing to crush credit unions - and remove the competition - by going after credit union tax exemption (LA Times).
MORE MARKET STUFF (you should know about)
Think the private sector gets it right? Think again ... The obscenities of capitalism and America's free marketeer lunatic fringe is getting it wrong, big time (Nation of Change).
Wealth and inequality in America ... Perception vs. Reality (Youtube). Hat tip to Jose for reminding me about this.
MISCELLANEOUS
Yes, President Obama knows what he's talking about when it comes to Trayvon Martin (Daily News).
In a "chilling" ruling, Chevron is granted access to activists' private internet data (Common Dreams).
"Go Public" ... the antidote to the billionaires war on public schools (Truthout).
In the WTF category ... The leaked NSA slide show the Department of Homeland Security doesn't want their employees to read. So, yeah, it's so secret that even when it's public knowledge you're not supposed to see it (Washington Post).
THE MINIMUM WAGE AND CEO SALARY GAP
While conservative politicians and right wing pundits follow the lead of the billionaire Koch brothers and push to eliminate the minimum wage in the United States the minimum wage in Australia is $16.00 per hour. It's based on a sliding scale and hasn't caused all the panic that the right wing claims it will do to the economy.
Meanwhile, in the United States the taxpayer subsidizes Wall Street with seemingly endless bailouts and favorable legislation, and then helps to underwrite the million dollar salaries of corporate CEOs with generous tax deductions.
So, yeah, America's working class is told they don't need a base salary floor, or worker protections, but America's richest class has their million dollar salaries subsidized by the American taxpayer and regular bailouts of the financial sector.
No wonder America's financial elite don't want to discuss class warfare. They're winning the war and don't want others to notice that it's been happening for quite some time now.
- Mark
Meanwhile, in the United States the taxpayer subsidizes Wall Street with seemingly endless bailouts and favorable legislation, and then helps to underwrite the million dollar salaries of corporate CEOs with generous tax deductions.
So, yeah, America's working class is told they don't need a base salary floor, or worker protections, but America's richest class has their million dollar salaries subsidized by the American taxpayer and regular bailouts of the financial sector.
No wonder America's financial elite don't want to discuss class warfare. They're winning the war and don't want others to notice that it's been happening for quite some time now.
- Mark
Friday, July 19, 2013
MARKET MANIPULATION, AGAIN
A week back I posted on Zero Hedge's contention that the giant banks have taken over the real economy, as well as the financial system, which allows them to manipulate markets on a massive scale. Here's yet another example.
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